The Discussion Of Lost Profits Calculation In Compensation For Patent Infringement

In Patent Law of China, the lost profits calculation is the first choice when calculating patent infringement compensation. However, at present, theoretical specialism in lost profits is few, as well as rarely applied in current judicial practice. In this article, I specialize in lost profits, put forward and expound the numerous factors and corresponding adjustment methods when calculating lost profits, on the basis of analyzing the rationality of the lost profits, studying experiences from countries whose judicial skills is mature and researching multitudinous elements such as quantity, price and technical apportionment.Chapter One is the comprehensive discussion, by studying on legislation and judicial practice, as well as comparatively analyzing the differences among lost profits, royalties and statutory demages. The way of lost profits to calculate patent infringement damages has its irreplaceable advantages and rationalities,but the case must meet two conditions if the judge wants to apply the way of lost profits, that is,"the identical market" and "the new business rule". At last, I put forward the computational formula about lost profits.Chapter Two is a systematic study of quantity, that is the reduced sales of patented product, as well as presumption of reduced sales. Undeniably, evidentiary presumption, which is applied frequently in judicial practice, is unreasonable. Furthemore, the rule of market shares, the productivity and marketing capability are also discussed in this chapter.Profit, including selling profit, operating profit, retained profit, marginal profit, industry’s average profit, is the theme of Chapter Three. The average profit of industry is an important reference value. Economic models and opinions of expert witness are essential. Variable costs, fixed costs must be confirmed scientifically, meanwhile, whether the price of patented product has been marked down by infringing products is noticeable as well. The topic of Chapter Four is technical apportionment. Studying experiences from the USA and Japan is necessarily, the analysis of market is scientific and reasonable when apportioning the patented product’s profit between proprietary technology and non-patent technology, in addition, the burden of persuasion should be distributed to infringer.